Or you can go a DSCR route (sometimes with no seasoning) but the terms suck.

Get with a few contractors and have them different quotes and how they will perform the work.

These properties are tenant-ready properties and support long-term growth. 

It'll be confusing in the short term, I think people assume it's inflationary.

For test 2 there are three ways to pass this: 1. 500 hours materially participating in the rental activity2. 100 hours and more then anyone else3. perform all substantial services. 

If this is a long term hold you'll want to have finishes that match comps, but are also still very durable for tenants.

Another possibility I looked into is simply leave the current SFH as is since we have long term tenant, but build ADUs on the lot.

Why don't you share a bit more about where you are in the process, what you know about investing in real estate, what your goals are - short and long-term, and tell us a bit more about why you are asking your question here on BP?

It doesn't take long to learn how to spot a good deal.6.

I think you have to employ mid term or short term strategies to get actual cash flow in year 1 on a 2-4 unit in a good location.